An IMF representative stated that she believes Bitcoin to be incapable of dethroning the dollar in a recent article.
Initially seen only as a form of digital currency used by hackers and drug dealers, today Bitcoin represents one of the most sought commodities in the world. Catching the attention of the International Monetary Fund (IMF), chief economist Gita Gopinath stated that despite its success, Bitcoin will not dethrone the U.S. dollar.
According to Gopinath, cryptocurrencies gained wide attention in the past few years. However, she still believes that the new digital asset class has not reduced the expenses required for exchanging currencies. In an article published for Financial Times on Jan. 6, she stated that:
“Improvements in payment technology may have lowered the cost of switching from cash to digital payments, but there is little evidence they have done much to reduce the expense of moving among currencies.”
Furthermore, the IMF’s chief economist said that the U.S. dollar’s perception has kept it not only stable but also one of the most dominant financial forces in the international monetary system in the last few decades. While most crypto experts propose that Bitcoin may become a widely adopted digital currency in the future, most hold the belief that the asset will not be able to challenge traditional fiat money.
Institutional push against Bitcoin and other global cryptocurrencies
The sector saw a rise in anti-crypto sentiment following Mark Zuckerberg’s reveal of a global stablecoin project led by Facebook last year. After the company made its announcement that its new cryptocurrency named Libra will launch by Summer 2020, numerous government and financial officials made negative remarks.
Other than harsh words, governments and banks have also created significant pressure against Zuckerberg’s project. Besides real arguments backing their need to block Facebook from becoming an international bank, institutions may have tried to maintain their dominance.
In December, we wrote about the likelihood of Facebook successfully launching Libra. Click here to find out more about how the global social media giant struggles with becoming a global bank.
However, while the western part of the world did everything to prevent a new widely-adopted cryptocurrency, the East did the opposite. In 2019, the People’s Bank of China announced that the development of their national cryptocurrency is almost at an end. The news was followed by Xi Jinping’s speech in October 2019, which advocated for blockchain adoption in China.